welcome to today's edition of "worldwide exchange." the headlines from around the globe here in davos in half an hour the cnbc debate begins on the future of the eurozone with the finance ministers of germany, spain, france, and eu commissioner. today's u.s. gdp report is expected to show the economy ended 2011 on a high note, but global uncertainty could still cloud prospects for a sustainable recovery. here in asia samsung electronics posting fourth quarter earnings but not enough to stop apple from taking its place as the world's top smartphone maker.

laes this huge, packed show coming up. to clarify some monetary affairs, but plenty to get through karen and christine. and yesterday, of course, the reaction to the fed boosted markets. how are we fairing today? the head lines out of davos in europe the talks of on sl going in greece, and so far markets a pullback coming back today. the ftse down in london. the dax off 0.2%. and initially the market's up about 1% so the worst performer there, the spanish down about half of a percent so markets in retreat after what we've seen which was a fairly strong session. so it is a weaker day out there.

we are watching the banking sector today, in particular two of the french banks, bnp paribas under pressure after ratings were downgraded. on bnp it based it on valuations so moved to neutral. credit agricole because of its exposure to greece. the bank completes its 7.5 billion euro rise after such a rocky road. it's unlikely to prompt share sells. christine, what are you watching in asia today? we're watching, of course, the greek talks you mentioned, karen, and gdp data coming up in the u.s. trade was cautious. some markets posting modest gains but other markets like the nikkei 225 in japan sliding once again on earnings disappointments. nec and nintendo sliding as a result because both companies forecast bigger losses.

the hang seng 0.3% higher but still holding on to the key 20,000 level. we had some profit taking going on in some of the chinese insurers and property players this there. the kospi gains were limited, of course, by profit taking but samsung electronics earnings in focus, samsung electronics coming out to say record earnings for the fourth quarter as this chip business remains profitable. new zealand 50.04 higher. leading the way on strong commodity priceses and bombay sensex up. a lot of things to look into, ross. okay, christine, thanks for that. remind you, of course, in half an hour's time the main cnbc debate kicks off here in davos. maria will be on stage with the finance ministers of spain, germany and, of course, france.

talking about the future of the eurozone. this is something david cameron talked on in his speech to the congress. >> there are a number of features common to all successful currency unions, a central bank that can comprehensively stand behind the currency and the financial system, the deepest economical integration with the flexibility to deal with economic shots. and a system of fiscal transfers and collective debt issues that can deal with the tensions and the imbalances between different countries and regions within the union. currently, it's not that the eurozone doesn't have all of these. it's that it doesn't really have any of these. >> british prime minister david cameron joining us now. the chief economist at standard chart. did he point that out correctly? >> yes.

david cameron was spot on actually. the euro has fundamental flaws. i should put my cards on the table and say i was happily involved in the note campaign. i was the co-author of one of the reports out 12 years ago as to why britain shouldn't join the euro and all the issues we pointed out then have actually been shown to be true. he touched on those. you don't have any room for flexibili flexibility, any room to maneuver and that's why here at davos, one of the big worries people have is this european problem is going to run and run and run. >> what do the finance ministers need to say on the future to convince you they are starting to go on the right path? >> well, i'm not con 0 vinvince are on the right path. they need to acknowledge that europe needs to move to a central treasury, towards a political union. the euro can't survive in its current format. if greece had its own currency, it would be devalued by 40%. spain would have to devalue by 25%. even france would have to devalue. of course they don't have their own currency, so the only way to

make up for that loss of competitiveness is squeezing their economies hard lead iing rising unemployment so the finance ministers need to acknowledge the pain that's been felt on the periphery and it will continue to be felt for quite some time. >> the german plan is going to cause a deflationary spiral in the peripheral countries. while we're here quibbling about a greek deal and it now seems to have come down to the imf needs to be squabbling over whether maybe the ecb or some public body needs to take a hit on their holdings. >> it's ridiculous. i remember being in washington in september. then it was hoped that europe would come out with this big bazooka of such that the imf might come in to help. at that time it was talked about this firewall needing to be about 2 trillion or 3 trillion euros. we didn't see any comprehensive action then. politicians have been very slow. they've neither been

comprehensive or fast enough for the markets and the challenge, and this was highlighted when chancellor merkel spoke in davos the other day, they're talking regionally but acting nationally. they're saying the right thing but then they don't actually do it because they're playing to their domestic audiences. i don't think greece can survive and the markets will then worry about what will happen next. >> this is christine. just to follow up on the exact point you were making about greece not surviving in the eurozone. are you saying the probability of the eurozone breaking up as substantially increased this year? >> he can't hear, christine, so i'll repeat the question. are you worried that the risk of a eurozone breakup has substantially increased because of the things you were talking abo about? >> it depends on your initial starting point. i think the markets are quite realistic now. here in davos, to use a ba r barometer, a year ago no one would put their hand up or very few to a straw poll as to anyone would leave the euro.

i was at a private meeting yesterday involving policymakers, it should be said, and more than half put their hand up. so i think, yes, the question, though, is not whether greece leaves. the big question is whether anyone else is forced to leave. and the good news, if there is good news, is european central bank has really helped the situation by pumping in liquidity and that's bought time, and time is a very scarce and valuable commodity. so greece is the problem for the next year. ultimately i think europe needs a two speed euro. >> a lot of guests coming up. there's at least one german ceo who has come out in the last week who said he would be happy to pay more tax to save the euro. that's the head of deutsche post, prang appel. [ female announcer ] investing for yourself isn't some optional pursuit. a privilege for the ultra-wealthy.

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here in davos we've heard of those being fairly gloomy about the outlook but that has contrasted with ceos outside of financial serviceses have seen their businesses with a lot of cash and making quite good profitability. these are the thoughts of some of those ceos from the last week

here. >> the austerity measures have an impact. it will lead to economic growth and that is our forecast and the consensus in europe that economist will grow substantially lower and maybe drift into recession and with that there will be lower demand for products. >> the whole outlook for me is too pessimistic. i think we are all looking at a year which is going to be uncertain and difficult but i think that's where we as corporates perform very well. i think we should kind of roll up our sleeves and get going. >> we did see obviously a slight slowdown in china in the tail end of last year. gdp of about 8.9%. we expect a slower demand in the first half of this year, but into the second half picking up again. but longer term, the fundamentals of their driving the development of the emerging countries and the economic

transformational change. more on that, joining us in davos in a first on cnbc interview is frank appel of deutsche post. thanks for joining us. 65% of your revenues are within the eurozone, as i understand it. you've said that you would quite happily pay more tax if it helped. >> yeah, i said all wealthy people should make a contribution as long as it is used to pay the debt down and not to give new gifts to the population. >> or give gifts to kcountries that might misspend it. >> and that's a different question. i'm convince that had we need a restructuring plan for some european countries and that is the only way how we can fix l g

long-term problem. and if you think of germany, we fixed the eastern german problem by pumping $2 about billion into that and now you see the b benefits. >> is there any appetite to do something similar again to save the euro or not? >> what's the alternative? i think we have to be honest that we have to think about how we really can help countries to catch up with the average, and if that's not possible, then we face a problem long term. >> that's very interesting, frank, because this week here at davos, one of the big events has been chancellor merkel's speech and it's very interesting afterwards. i think she impressed but many of the germans i spoke to thought she had done a good job. she has this difficult balancing job to keep this on side while at the same time the role in europe. how do you think she has played things this week. to you think it's marked out any new course or is it more the same in terms of german policy? >> i think she has a very clear

perspective what the course has to be, and i think it's very explicit, too, and that's encouraging. we need a clear plan, even if it's tough and she speaks about that, and that's good. and that doesn't solve the short-term challenges, so we have to find some way to overcome the short telephone term challenge but the long-term plan to grow more integration, more joined control of what's going on is the right direction. >> more europe, as she said. >> karen? >> i want to ask about the tone in davos about the economic environment in the eurozone 0. in the past you said if you do see low economic growth, a recession in europe, this would have a negative impact on your revenues given the imf is forecasting contraction, what do you make of what ceos are also saying in davos about the type of conditions you're facing? >> so, as always, that's very difficult to answer. but i'm on the more optimistic side. everybody is talking about the crisis which has not taken place

yet. the politicians, the journalists, the managers, the population, so i'm slightly optimistic. it's unpredictable anyway but i haven't seen, we haven't seen in 2011 any signs of the global slowdown or even the european slowdown so i'm more on the optimistic side 2012 could be better than we expect. >> mr. appel, this is christine all the way here in asia. i know you're optimistic about asia because like your rivals you are expanding quickly in the region. where do you see most growth coming from asia and to what extent are you worried about a slowdown coming from china? >> i think for the time being the engines and locomotives will remain china and india due to pure size but other 0 countries are developing well, too. so, of course, the 10% growth we have seen in some years in the past is not sustainable but i'm not afraid that we will see a

massive slowdown in china because the consumer demand in china will grow with gdp of china, more again and, therefore, i guess we still see a continuation of the growth in china. >> frank, thanks for that. frank appel, ceo of deutsche post joining us on cnbc. still to come, another first, we'll be joined by ole dw deripaska. they talk about changing their banking last week as they worry about the global economic outlook. ♪ ♪ you and me and the big old tree ♪ ♪ side by side, one, two, three ♪ ♪ count the birds in the big old tree ♪ ♪ la la la [ male announcer ] the inspiring story of how a shipping giant can befriend a forest

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in a few moments we'll be joined by oleg deripaska. the ceo of rio contintinto is p bullish on chinese growth and the impact that would have on commodities. do you share your optimism that china 8%, it's fine, relax? >> yeah, well, i think china is cooling. i have been in asia for two weeks and the combination of monetary tightening from last year plus the slower export performance in recent months will take the heat off china. they're trying to squeeze the property sector still so they

don't want to ease up too much too soon. the chinese economy probably down to 7.5% growth. could go lower than that. but then the key thing, the key difference between china and europe is that china has lots of room for policy maneuver and they have the ability to start easing policy and then china will rebound. a cooling not the collapsing, and that's a key driver for commodities. commodity markets have a firm flaw, strong underlying demand from china, india, and a soft ceiling. >> christine? >> hi, this is christine. it's interesting to talk about policy easing but what about the fiscal side? do you think the chinese government is prepared to put in more stimulus if necessary? >> not really. not at the moment. what one has to bear in mind, though, that china unveiled its five-year plan last spring and for people in beijing that's probably the most important policy development. so that's still having an underlying positive influence on the economy. they're not going to unveil

fiscal policy through the fiscal room for maneuver, have the room for maneuver they had a few years ago n. terms of your question, it's about monetary policy. they're going to ease bank climates this year allowing the banks to lend more, maybe 8.5 trillion rnb, ease reserve requirements and maybe also cut interest rates. so china feels it's already got enough of a fiscal boost because of the five-year plan. i think the policy stimulus side is very much a monetary policy. >> what about what has been the prime engineer of the global growth? the fresh estimate of gdp today 3%. that would be the best since the second quarter of 2010. i mean, is it going to get better after that? >> no. >> is that one off? >> we stand the chance and what we saw last summer is people were too pessimistic about the state. it's gone to the other extreme trying to be too optimistic. i think the u.s. could have an air pocket in the next few

months because consumers don't have a lot of spending power. the key story is america is growing. it's a steady pace not a spectacular pace of growth but if there is to be any upside it's because big corporate america has pretty good balance sheets. this stage of a cycle big corporate america would normally be expected to be investing. at the moment they're thinking twice about doing so. so at the moment it's steady not spectacular growth in america. >> all right. we'll take 30 seconds out from davos where oleg deripaska joins us. back in a moment. samsung electronics boasting an operating profit. on a quarterly basis samsung's te telecom business saw a narrowing profit margin as competition heats up with rival apple. research firm, strategy analytics took the position as the top smartphone maker in the fourth quarter thanks to the popularity of its iphone 4s. samsung said a big chunk of its profits also came from strong

semiconductor sales and has pledged $22 billion to boost production in chips and flat screen units. samsung electronics shares finishing to the upside today up more than 1% at 1125000. it's hard to read but it's a lot of zeros. it's hard to read that. try reading that, karen. >> i'm glad it was you and not me. the big story out of europe here. private creditors will continue talks with the graek government today on a bond swap plan. the institute of international finance, the banking group that's leading the negotiations, said last night in a statement that some progress had been made and the talks focused on the legal and technical issues of a voluntary haircut. ross? the world's biggest aluminum producer, joining us first is oleg deripaska, the ceo.

you were discussing more bank ing covenance. are you feeling slightly better about that? is. >> we are all concerned, there's no doubt, but the situation is to live with the circumstances. that's why we just look at numbers which produce our main consumer, the transportation sector, construction sector, and the electronics, kitchen appliance and so on. and what we've seen in those areas, of course a certain area where we can feel and actually see some downturn like in europe. but there is an area where going forward to asia. also reports of signals for the last quarter. that's why, let's say, we're not pessimistic but are optimistic.

>> what do you think will happen to aluminum prices? >> we'll be reasonably stable for six months and in the second part of the year we can see some movement. >> we were talking earlier about demand from china and elsewhere. when people look at commodities, they are talking about demand. but maybe if i can ask you about the supply side because when we've seen prices go up in recent years, it's led to a lot more investments across the whole commodity area including aluminum. is there any danger of too much supply coming on to actually start pushing prices down? what's the supply situation in terms of the response to strong underlying demand? >> outside of china, we have a china who is in the main part of the supply equation. i don't believe that china will export because they have some potential to export the semiproduct or in the product of

aluminum. there is another process going on. if you see the country which imports energy, could not produce sustainable aluminum and this is the process in china. they have new leadership. new leader shship will look at economy and cross subsidy which goes through the different provinces, different sector economy. and we believe from this point of view, the supply side from china would be reasonably down. not immediately. but let's say in the next two years we could see the result. >> okay. >> you have nearly $11 billion in debt. why do you want more flexible banking companies because there were suggestions you were asking for a skip in interest payments. what's going on with that? >> every company wants to reduce its payments and make more flexibility especially in these circumstances. don't forget only our stake and the risk that's why for us it's

not really sure long term and what we've done is restructure 2016. this is a great success for our team and our bank this year. >> okay. thank you for joining us. oleg deripaska of rusal joining us. we'll take a short break. still to come, of course, we have the start of that key cnbc debate with the finance min ministers and economic ministers of germany, france and spain and olli rehn as well and we'll be joined by the ceo of prudential and the ceo of dsm as well. that's the room the debate will take place in.

this is cnbc's "worldwide exchange." the headlines from around the globe, here in davos the cnbc debate will kick off with the finance ministers of germany, france and spain and olli rehn. today's u.s. gdp report is expected to show the economy ended 2011 on a high note but global uncertainty could still cloud prospects for a sustainable recovery. samsung electronics posting

ga l galactic fourth quarter earnings but not enough to stop apple from taking its place as the world's top smartphone maker. this is the cnbc future of the eurozone debate kicking off fairly shortly, in about six or seven minutes. we'll go to that as soon as it starts. it does give us an opportunity to talk to more ceos first here on cnbc. joining us now is feike sijbesma, the ceo of dsm, the nutrition and pharmaceutical company. thank you very much for joining us. as we wait for the finance ministers to tell us what they think the future is, what's it like being a eurozone company working in this current environment? >> well, dsm is a global economy. we are active in the autoparts, too, but of course we are originally based in europe and we have activities in europe and of course we are concerned about

europe and we think that the real economy should raise its voice. it's also our europe, even stronger, and we are walking along a cliff already for three-quarters of the year and one misstep and we fall into the cliff and i don't think we can afford in the interest of our companies, our workers, the consumers in europe and strange that europe and the united states at this moment is disconnecting in terms of economic growth. >> any disconnection -- >> i'm sorry? >> can that disconnection continue? >> the unemployment is growing. europe is in a recession. unemployment is growing. there's a huge unemployment in europe and it is dangerous. and we as dsm together with shell and phillips to make clear for companies there's only one direction, one collective united

europe with one euro and -- >> does that mean one federal -- you want to ask a question. >> what you're saying mirrors somewhat with a we're saying at standard chartered. unemployment in europe is a big worry. maybe given what you've been saying about europe and the states, i wondered your perception about growth and demand in the rest of the world and your feeling about the emerging world and how important they could become for your business in the future. >> well, at this moment there's even more discussion about the potential slowdown in china, but i would think, more important, is the world will have two growth speeds anyway even with a slowdown in china or india. the emerging economies will grow faster and a lot of focus is being put on that. many companies focus on the growth and a growth of 8% in china is in absolute terms maybe the same as 11% a couple of years ago.

you can always grow with 11%. but i think that there's no takeaway opportunities in the rest of the world, the concern we have for europe. >> one of the big issues here in davos is that big companies in europe and in the states have balance sheets that are pretty good and the question is whether they're going to invest and if they are, where are they going to invest? so given what's happening in europe, is the incentive to invest more and more fervor away from europe across the emerging world given the growth picture there? >> we are such a company with a strong balance sheet. we will continue to spend the money and invest and it is not so that due to the issues of europe, we say we will not like to invest in europe, not the case. >> the joint venture announced this week for advanced biofuels. the next generation biofuels. biofuels that will not take away from food crop production. just explain that. >> yeah. the biofuels to a large degree use a component, a food

component of the long debate with about food versus fuel. we should not be going into that debate but, anyway, what we now do for the first time in the world, we build a big factory using the waste component of food and convert that into fuels and, therefore, we change this whole food/fuel debate in a food and fuel debate, and i think we will need -- >> i've always been wary of b biofuels because it takes away from food production. if you stop in that, that is, i think, probably a major -- thanks very much indeed for joining us, feike. thank you very much, gerald that debate is coming up shortly on cnbc. time to update you on what's happening with global markets, christine. and i'll do that, indeed, ross. here in asia holding pretty much steady. trade was cautious ahead of the u.s. gdp data. the outcome of the greek debt talks is keeping investors cautious. the nikkei 225 continuing to

slide on earnings disappointment. we had nec and nintendo down because they forecast bigger annual losses. the hang seng up 0.3%. we had investors cashing in or taking profits out of china, related players like the property plays. the kospi somehow upside is limited as well. 0.4% higher. the australian market coming back on the holiday. the miners leading the way and the bombay sensex up 1%. it's a good picture but bear in mind trade is cautious here in asia. karen? >> we do have some selling across the charts. markets giving back some of the solid gains we saw yesterday when there was one plus percent across the board. you can see the ftse down about a third of a percent. the dax has been toying with moving into the green but so far is off about a tenth of a percent. the frieench market we are seei selling in the major banks after downgrades. bnb paribas and down grades from

jpmorgan. the italian market is up about 0.8% and the ibex in spain dropping about half of a percent. so we are seeing a little bit of selling as the market here, ross, also focuseses on those greek debt talks again with suggestions the private credit holders might accept a yield lower than initial 4% coupon that we're seeking. >> okay 0, thank you very much, indeed. not long to go before we start the cnbc live debate. maria is hosting this in the main hall of davos and joining her we have the french finance minist minister, mr. baroin, olli rehn for monetary affairs and what they will be discussing is the future of the yeurozone. very key debate.

remember, it was just yesterday that david cameron, the british prime minister, said they didn't have the kashg rcharacteristics for a successful eurozone. over to maria. >> joining me on stage to discuss the developments and where we are right now all the way to my left wolfgang schaeuble, mince it ter francois baroin, luis de guindos and olli rehn. gentlemen, thauch for your time and for speaking to us today. we heard mario draghi say that confidence is the most critical part here. minister baroin, has the most recent facility by the ecb instilled stability and confidence in terms of where we are right now? >> hello to everybody. >> translator: the council of

the ecb is a very important decision. in the framework of the agreement of the 9th of december there was a debate between france and germany, as you know, within the eurozone about the status of the european central bank and about its qualifications of last resort. now some of us in the world in general and within the european union consider that it was a reasonable debate. now the debate no longer exists because of strasburg, europe, merkel and sarkozy have decided it will no longer be at the center of the debate. the ecb is considered independent. it has its own policy and we can certainly say whether we think that decision is right. but the unlimited amount of liquidity for three years at 1% has considerably reduced the

tensions in the european banking industry and it's very important because it will enable us to restore can haonfidence gradualt it's not enough, of course. they will have to be more chances, we'll have to confirm the agreement on the two issues of the agreement between the heads of state of government the 9th of december, a fiscal issue, the treaty, ratification of the treaty, and a solidarity issue. and brought about how we came together to continue to support growth. >> minister schaeuble, how do you see it? >> translator: german and france are basically seen in the very same way. the cause of the crisis is basically the factor that there

has been a lack of fiscal displan indiscipline in a numbe of countries. if we want to restore the confidence which has been lost as mario draghi has just said in this clip, then what we have to do is, first of all, to fight against the causes of the crisis. in other words that's something that has to be done in the relevant countries. and that is happening and where it's happening the developments on the markets are positive. that's the case in italy. that's the case in spain. we're seeing that confidence is gradually being restored. the second thing is we need a better structure for the european currency is. this is what we're doing in the fiscal compact and with the european stability mechanism and the agreement has been reached by finance ministers this week.

and it will be put before the heads of state in government on monday. we hope that we can sign it in february. we shall be able to bring it into force very soon. we hope that we can quickly pay in capital to it. the fiscal compact will do something we haven't had enough of so far which is institutions and rules which make it possible for us to agree on a common fiscal policy in europe. and then, of course, we must strengthen the competitiveness of european countries. that is the task that the european council will have on its agenda next monday. of course these things don't happen overnight. and while these things are happening, we need solidarity. this is the solidarity mechanism. this is something which the ecb is doing. it's doing what is necessary and we have to make sure that we

don't send the wrong significant is n signal, the wrong incentives. if we all act together, then we're on the right track and we shall do everything we need to do and the europe and the european union will have a stable currency and if we have -- we'll be able to deal with the debt problems in other parts of the world which are bigger than they are in the eurozone. >> we'll get back to the comment you made, we must prevent things from happening because, i think, that we all would like to know specifically more on that comment. but minister guindos, from your standpoint, how do you achieve what minister schaeuble is saying in terms of solidarity and unity? >> i agree with what they have

said about liquidity. liquidity is not the final cure to the problems that we have right now in the eurozone. it's a helping hand but not a final cure. what we have to do is to, first of all, put 0 our houses in order. to advance the consolidation, to avoid and to circumvent the problems in terms of public deficit and excessive level of debt. simultaneously, and i think this is going to be on the agenda over the next months and weeks to try to take the measures to foster growth. and i think that we are going to speak more and more about growth and employment. i think that will be the agenda of the next weeks. we are very close to have a new institutional framework that i think will be tube truly useful

the flaws in the past. i think that we have to bring to the fore the agenda of growth, of reforms, of employment. >> isn't this the crux, though, of the problem in terms of moving forward? olli rehn, how do you achieve growth in a moment of time when you actually are implementing austerity? >> that is indeed the key question for europe and this chancellor. in order to create foundations for sustainable growth and job creation, we first have to resolve the sovereign debt crisis and mitigate the banking sector facilities. why so? this is essentially a crisis of confidence and in order to resolve this crisis of confidence we have to do things like the european central bank

has been doing. i find the ecb actions very important in terms of avoiding a credit crunch in the european economic and also facilitating some more favorable bond auctions of, say, italy, spain, and also the return of ireland to the bond market in the last couple of days. so the ecb actions are important but, of course, not enough for the loan and, therefore, we need to have a focus on basically three things. we need to have a new fiscal compact and we are, in fact, revamping the institutional architecture of europe so that we are soon going to have an economic monetary union. it is going to be a very different structure than the previous one and the new

structure prevention is the name of the game and we want to prevent the kind of fiscal crisis or external imbalances that have happened in the past year with economic and human costs. second, we need stronger european firewalls and we are working this out in these weeks and i expect we can come to a positive conclusion where we also need support from our american and british to increase the resources of the international monetary fund and, third, yes, we need to focus on reforms and growth employment as colleagues say. i would draw your attention to the fact that we have, in fact,

reforms going on in europe. italy is moving faster in its reforms. spain is moving and you factor all the european union members that are doing their part. both in fiscal consolidation and structural reforms. so we have a somewhat better sentiment for the moment. not the time for, it is the time to further beat the confidence and that's why the coming days are so important because we are going to finalize some important decisions that will facilitate better confidence in the european economics so that we can release and liberate the case and spirit for growth investment and employment. and who does not believe in the animal spirits does not believe in the modern economy.

>> olli, you said some very important themes there and i would like all of your commentary on this. let me first take on the firewalls. how much bigger and deeper firewalls would you like to see? what are we talking about? what's your expectation? >> we have already decided that the new, permanent european stability mechanism will have a capital base of 700 billion euros which will provide an effective lending capacity of 500 billion euros. now we have in operation a temporary european finance stability, facility, which has consumed around 100 something and with the new greek program about 200 billion euros probably which leaves around 250 billion euros in this temporary dsf. the question whether we can

combine these. that's something that the ministers and the leaders of the eurozone will have to discuss and decide in the coming weeks. in parallel with the imf where christine lagarde has made a request for an increase of 500 billion euros. the eurozone has committed 150 billion euros. so you can calculate in which ballpark in which range hundreds of billions we are talking about when we talk about enforcing firewalls for the sake of stability in europe. >> minister schaeuble, chancellor merkel has made some bold statements about the long term and what needs to be done over the long term. but as we sit here today the short term seems quite critical as we await a decision between

greece and its creditors. what is the plan over the short term? >> first you must do the opposite in the short term. you have to do it in the long term. if you want to redwayne credibility, you have to do the same, it's the same direction. in the short term and the long term. that is a critical issue and, therefore, we are working on finding the reasons of the crisis, and we will -- we have to do what's needed and we will decide what will be needed to buy the necessary time we need to. in the short term we are negotiating with greece. greece is a specific case. you can't take any consequence for any other member states. it's totally different.

it's a very specific case in greece. we need a reduction of debt. it has been approved that the greece has to be reduced at 50%. and we are negotiating and we are very clear on monday that the need for a new program for greece is stability and that means not over 120% g it dp in 2020. that has to be achieved. it's not easy but it's possible and it will be done in the coming days. i'm quite optimistic. then we need a program increase. we discussed it very clear on monday with mario draghi was very clear. not only to commit itself, greece has to deliver. greece has committed itself two 0 years ago and not all of the

commitments have been delivered and fulfilled and that is one of the krcritical issues to regain confidence and that is what has to be done in greece and we must not give the wrong incentives. no firewall. any figure, it will not work. the problems will not present. >> i would like to get all of your takes on something that has been talked about very much in the market, and that is, of course, a default in greece. what is the worst case scenario? many people expect greece to default. what's the worst case scenario, minister schaeuble? >> we don't expect the default increase. a long time in prices, but i don't expect the default in greece. i am sure that if everybody is ready to give what has been

agreed and all the parties are ready to do it, we will avoid -- we will avoid and we can avoid default of greece. of course the private sector has to take its responsibility. the first time in july of last year. it's not a huge story and now we are discussing the concrete figures and i am quite optimistic we can avoid it but it depends on if dwroogreece isy and to fulfill its commitment. >> mr. baroin? >> translator: let me say, first of all, with the greatest respect i have for my colleagues, we're not here in a negotiating session of the euro group because the question that you raised about firewall is an essential question in our discussions with wolfgang and other colorakocolleagues in minf

finance. the higher the firewall, the less it will have to be used. that's the deterrent effect. one of the lessons we can draw from the crisis is that we have to deal with the greek case, avoid contagion, put in place the arrangements necessary for fiscal consolidation, for fiscal and economic convergence, discipline means something. there have to be sanctions. we've found the balance in our discussion with wolfgang and other colleagues about the level of structural deficit, about the level of reference for the growth and stability pact. we still have a slight debate on the reference, the benchmark for the debt. that's a part of our discussions and we must advance at the same pace with the same intensity on the issue of solidarity. and the issue of solidarity has taken form. we're anticipating the permanent

protection mechanism. we're bringing it forward six months. if we can even faster, we shall do it. but we brought it forward already by six months. and what we have to do is to accompany the idea that the firewall is probably one of the best responses but that's one of the issues i must say that we haven't dealt with this finally today but it will be on the agenda. >> we'll take a short break. more from this debate.

the fcnbc few you tour of te euro dough bait continues. >> a fiscal in terms of corporate government, in terms of commitment from the different member countries with this situation. i think that would alleviate many we are seeing right now in the markets. >> so how big of a firewall would you like to see? >> well, i wouldn't say a figure. i think the firewall has to be big enough and flexible enough you to avoid using the firewall, i think the main element that we have to put in place is a new

fiscal framework, a new corporate government framework and the commitment of the different governments with fiscal stability and with structural reform. i think if we have these three pillars in place, firewalls are not to be used. we are the deterrence. >> olli rehn, i would like to get your comments. from what you've heard so far, will this be enough to calm the markets? and stop any dislocation which, of course, would accelerate the problem? >> i have a long time ago stopped predicting the behavior of the markets. having said this, i think for the market forces and this audience, i think there is one -- there are many but there is one very important observation you can make. that is in fact quite strong

unity among the ministers of the eurozone and of course we need to tackle this crisis. and, in fact, while i know more or less how the eurozone will look like, say, in three years, i'm going to say that the next three days will be very crucial for the future in three years. in other words, we are just about to close a deal on the y private sector involvement between the greek government and the private creditor community if not today maybe over the weekend but, in any case, preferably still incendiary rather than in february. we are close and we have to have a sustainable solution for greece even if greece is a

special and unique case and private sector involvement in that sense will not be applied to to any other country of the eurozone. and then we have two very important decisions related to this basic fair deal between reinfor reinforced fiscal discipline on the one hand and reinforced firewalls on the other hand. the treaty on the new fiscal compact will be finalized on monday which will help create a much sturdier framework of the eurozone government and then the treaty on the european stability mechanism will be concluded. this will be a very important three-day period for reinforcing confidence in the eurozone and i'm sure we will succeed in these decisions and i hope, of course, will have a positive

confidence building impact on the market sentiment. >> let's talk about some of the ideas out there. minister schaeuble, talk to us about the possibility of a euro bond. do we need a euro bond? mario monte backed the idea before becoming prime minister. who pays and what are the terms? >> the problem of yeuro bonds i as long as you don't have structure in the european institutions, in the european treaties to have fiscal policy, you have the monetary policy very specific situation in the european countries. you have common can monetary policy. no member state has other

policy. that is very specific. it's difficult to understand if you are abroad from europe. we gave up parts of the monetary polici policies. if a national fiscal policy makes a problem. as long as we have not something like we are now doing, a fiscal union, we have a similar construction for fiscal discipline. as long as common bonds gave their own incentives, because you may -- you spent money you don't have on the bill of others and that is the wrong incentive. in a functioning market economy, in the end you have to pay your bills. in you spend on the risk of others, it's a temptation

everyone will favor in avoiding such a temptation and, therefore, we have to concentrate on building such a structure for fiscal and even for a better competitiveness in the union. we knew when we created the european currency, we knew that we will build -- we have to build in the coming years something like a political union. it's always going step-by-step. if you want to start this other, you never would have achieved one step. if you go step-by-step, what we did since the early '50s, we have been in the long run. we will convince the long term

building something. we must not have the wrong incentives and, therefore, that would be sending the wrong message in fighting the real causes of the process. >> olli rehn? >> i would tend to agree with wolfgang and in my view, in fact for any serious mover concerning some kind of euro bond, the necessary condition is a substantial reinforcement of economic governance to create an ever closer economic or stability union. i want to give you one example how this works because it is already moving forward. you talk about the new fiscal compact monday. that's important as a very

profound political commitment of the national parliament. but at the same time we have already existing secondary legislation in mid-december and because of that i sent early letter to hungary and poland around mid-november indicating that there are fiscal targets in 2012 are likely to be missed unless they take additional measures. and if they do not take additional measures, then they may have to resort to sanctions for the eurozone countries. what happened four out of the five countries took action. cypress just before christmas, very difficult discussions in the parliament cutting its deficit from five person to

around two and a half person. after difficult discussions in the government coming down from 4 1/2 person to 2.728 person of fiscal deficit. you see that this six pack, as we call the new legislation, the six pack is already working and delivering and we will further enforce this once we get the new treaty on fiscal compact. one final comment, i find the german council of economic advisers proposal on a deficit redemption factor or debt redemption fund very smart and potentially doable which is certainly worth exploring further. it has some resemblance to the american audience, some resemblance to the events in the united states of america around 1790.

when the first treasury secretary of the u.s. alexander hamilton pushed through the assumption of the state following the war and created what we could call euro bonds in the united states of america. which, by the way, became the foundation of the federal economic government for the united states of america. and in the past 212 years should not be underestimated also on this side of the atlantic. >> thank you, olli. i want you to jump in. >> i think the euro bonds perhaps are the final target. i think we have to take a lot of steps before and we are doing that. but i would like to stress, and i think this is important, you know, the importance of the political commitment of the

different member states. i remember in 2003 when france and germany breached the rules of the stability and growth pact and i think that because of that decision we lost a lot to impose fiscal austerity to risk. so this is something that we cannot repeat again and i think this is not only is a question of the role of the governments, the fiscal compact, et cetera, we need much more compromise and commitment from the different governments with the importance of fiscal discipline and with the importance of a common competitive approach to economic policy among the different members of the eurozone. >> but what about in discussing the participation of the ecb, should the ecb take a haircut the way that private secotor would?

>> well, i don't think so. we are discussing the private sector involvement. i think that kind of forecast might incur the monetary mechanism of monetary policy that now i think should not be involved in any kind of public sector involvement. having the discussion with the government right now, and i hope as olli has mentioned that we will reach an agreement quite soon. >> minister baroin? >> translator: i think we have the same position on the euro bond outside the eurozone that's seen as the philosopher's stone, the kind of answer in the international crisis, the epicenter of which is the eurozone. what i hear about points, mutualizing debt. but doing that in countries where the main question is

sovereign debt, the other main question is how to fuel growth. given that we have to move forward on those two tracks, we don't solve the basic problem which is the creation of monetary zone which hasn't been created. what we've decided, what we decided in december is firstly to put our house in order. that means fiscal discipline, that means coordination, that means convergence and that means solidarity. it is the path of solidarity and that path is not euro bonds, it involves firewalls. now down that path when states have respected their commitment on debt, when the situation is stabler, when confidence exists without any doubt in the market, then the time will be right for euro bonds but that cannot be

the solution to the crisis as it stands at the moment but rather the outcome. >> we would like to get the audience involved and open the session to q&a. we have microphones walking around. and in the meantime, while we get a microphone to you, i want to play a sound bite from george soros, minister schaeuble, let me read this to you. george soros says that the -- on the policies out of germany, the policies germany is pushing on the eurozone is creating a deflationary debt spiral. putting pressure on wages and profits and reduces tax returns and the debt is expressed in nominal terms. a ratio of gdp to debt, gdp declines and the debt ratio goes against you. this is the trap that we are caught in today. overcome the short term and this is the short term, this could lead to a lost decade. how worried are you about a lost

decade? >> i don't agree with it, not surprisingly. and i would like to tell him and to tell you and the audience if you want to create more growth, you can't deliver this only by spending more public money. and increasing the deficit. even in the economy we got the report that if you have achieved some greater public deficit, it is counter productive in creating growth. therefore, you need structural defaults. therefore, concentrate in europe not on increasing the deficit,

which are even too high. and i was -- i have been the finance minister since a little bit more than two years. and in the beginning i was asked how will you deliver your obligation through the european stability and growth? the government has decided to do it. some months later i was criticized, oh, you are reducing your deficit too quickly. and you destroy growth. some months later we delivered in germany growth by 3.7 in 2010 and 3.0 in 2011. and tim geithner, our good friend, came over to berlin and said, oh, we will make american fiscal policy more german-like because in germany, i don't know how it works in the united

states -- in germany and i think in europe it's clear if you want to have more internal demand, investment consumption, you have to deliver some confidence. if you reduce your deficit, if you make your deficit sustainable in germany it works. people regain confidence. the actual figures of private consumption in germany are very high, very sufficient and, therefore, german economic outlook is driven by demand and we can destroy it and increase the deficit and we can support it and therefore we have to go for structural reforms. >> we have two quig comments here from mince it ter guindos and olli rehn and then a following. >> a short remark. i come from a country that put

in place the largest fiscal stimulus in the eurozone. plus 2% in 2007 to a deficit of 11% two years later. we had the largest degeneration of the labor market that we have ever seen. so i think that we should be careful in considering that the implications that our fiscal expansion has on the economy. because now in spain we are having difficulties from the financial standpoint because while the stimulus was a mistake. so i think this is much more important in order to create confidence to put your fiscal accounts on a sustainable path and simultaneously implement an aggressive and ample agenda of structural reforms. >> olli rehn? >> i would like to bring briefly

a global and long-term view on this discussion. in fact, inspired by john claude trichet. if you look at the previous decades and the crisis in previous decades we have the cases of latin america in the 1980s since 1982. then we have the asian crisis in the 1990s. we have in fact the case from the 1990s. what has been the lesson in all these cases they have taken structural reforms and reinforced the sustainability as the foundation of solid and stainable economic growth and look at brussels. even in the current global

difficulties, the financial crisis. asia the same story. much more resilient in the current financial crisis. and in europe, if you look at the countries who went through a similar kind of experience they are now more resilient. in the 1980s, denmark, 30 years ago, sorry to say, denmark was almost a basket case of europe. now it is very resilient. in the 1990s finland and sweden very serious banking crisis. now doing relatively well. and germany in the past decade. i think this is an encouraging example of the importance of structural reforms in europe and global. >> we have to get two questions in here on the second row and then minister baroin with a

comment. first in the second row and then i'm coming in the back. >> thank you. i want to take advantage of the joint presence of the spanish economic minister and of commissioner rehn to ask the question leveraging on what was just commented today. i see that the spanish minister said it basically wants to do all you want, all you can to keep it in order and commissioner rehn the five letters in the past two congress. now, unfortunately, you know, we need -- we spoke about the reassurance, the confidence in the market but we as market participants would like to know the spanish economic minister what they are going to do to put their house in order this year. as you know on the last day of last year there was a substantial overshooting of the deficit, and now we are hearing some comments which we are not -- we don't find very assuring concerning the meeting of the targets of 4.4% gdp this

year. i wanted to know, please, if you can reassure us if if this target will be strictly met and what is your opinion. commission commissioner rehn, if this target should be met or it should not or because of the economic conditions. >> yes, minister, briefly, please. >> well, he is totally right that while the new government of spain on december the 23rd and on december the 26th learned that we have a slippage in the accounts and three days after took action to reduce the deficit by 1.5% of gdp, even increasing the taxes. the tax on personal revenues. today the spanish government is taking action to control and to impose much more transparency on

the regions as one of the main sources we have mentioned before. so we will have much more commitment, much more compromise from the region in terms of public consolidation. simultaneously what they have to say is the rule we have is going to be stricter than the rules set in brussels for the rest of the -- for the members of the eurozone. and finally with respect to your comments on the future of the path of fiscal consolidation, what i have to say is that the spanish government is going to be based on a popular approach. consolidation is not an option. this is something that i have mentioned a lot of times. simultaneously we have to pay a lot of attention to the bank industry restructuring and to the labor market reform.

spain is a country with an unemployment rate of 23% of the labor force. this is something that we cannot accept at all and i think this is going to be the vital element of stress and importance and on the main priority the agenda of the new government. and i expect over the next weeks the new government would forward a reform of the banking industry and simultaneously a profound and important reform of the labor market. >> how much capital does the banking industry need? >> well, this is not the question of capital. what we have seen is that there is the need of further provision by the spanish banks because there is the book value and the market value. >> olli rehn? >> i think it's, of course, regrettable that fiscal targets

over last year it was very important that the new government as its first act before the end of last year took action in order to for this year and i see that the actions of the government is planning are necessary and fiscal consolidation and structural reforms are complimentary, of course, not alternatives and it's important that spain will meet its fiscal targets this year in order to achieve its target. also next year and at the same time it's very important to maintain this strong momentum of structural reforms both in the banking sector and also in the labor market to reform its institutions and its functioning because the unemployment of youth unemployment of 44 or 45

person is something that no society can sustain. >> very quickly, minister baroin, you wanted to address the debt. >> surely -- >> translator: in this debate that exists between consolidation and growth, we have to reduce debt. we have to do it according to a specific time scale. in france we will be -- we will meet our targets. we should be at 5.7, probably under 5.5 and we will work to produce growth. now we will be doing that by focusing on the cost of labor. we will be financing it from other sources. that will be the way that france

will be supporting growth. germany, i'm sure, will be making its contribution in another way. each country will do it in their own way. >> is labor reform the most important point on the agenda right now for france? >> quite. >> and for germany? min minister schaeuble? >> i think our most important thing is to look that we have innovations in infrastructure set in place because we have increasing, as it turns, public opinion increasing infrastructure for communication that has to be overcome, we have to discuss it. we have to fight for new

technologies because on behalf of our democracy we have to know that we have to have innovation. we will not be able in the f future to stick to the relative level and so stability in germany. up to now we are relatively succe successful but we must not think that it's granted for the future. therefore, it's a european matter. for example, we will work together for youth employment on the our pen level. it's quite important. we can have a win-win situation if we make a european market for young generation and something else. >> minminister, it seems like a innovation in terms of deficits and austerity put in place.

>> we have in reducing our deficit we have increased our budget figures for science, for research. you have to concentrate. if you're reducing deficit does not mean you cut every expansion. you have to look where are the investments for the future and we're going to do so. it's what we do in all european member states and the european level and that is the you'europ mandate. >> we have a question in the back. please, yes? >> my name is maria. i'm a member of the european parliament for sweden. last week we voted a position across political groups asking in the negotiation of the new treaty to take into consideration, one, the community approach. two, that everyone should sit

around the table 27 plus the presence of the european parliament. three, that the european law is respected, which means that the treaty should work in the frame of the lisbon treaty. what are you doing in the final stage of the negotiation to take into account the voice of the 500 million people of europe that we do represent and not to undermine the common institutions and key transparency and openness of the decision making process? thank you very much. >> who would like to address this? >> i would like to give you the mobile number of -- come on. of course. it's not a joke. we would -- it would be much more -- much better and better to understand for everyone outside of here if we do what we

have to do in our european treaty. it has to be done by anonymous decision. therefore we go -- in the meantime we go 70 plus 9, everyone is invite d to join. of course we will make -- we are in favor in the treaty to make everyone who signs the treaty will take part in the decision in the treaty and we will invite european parliament to take responsibility. of course it is much easier in reducing the treaties, therefore, on monday we agreed we will be in favor of implementing the treaty not only in five years but in three years and that i hope we can convince all of our friends in the european union.

>> olli, would you like to add to that? >> i think wolfgang has the essentials of it. one aspect, and i can tell that the commission by and large sees eye to eye with the parliament as the reforms of the economic governance to enter this treaty as well. i think it's very important and largely thanks to the european parliame parliament it is fully restored and, in fact, reinforce 0ed in the new fiscal compact so that once the new fiscal compact will be agreed on monday then the commission in the coming days will supplement the already existing secondary legislation, the six pieces of legislation reinforcing the governance we call the six pack and we will make concrete proposals so that

while the treaty is an important political commitment at the same time it's concrete and practical implementation will be done through the secondary legislation which means p precisely through the method that makes the european union work and to deliver results. >> we would like to take more questions but we also want to keep you on time. thank you for joining us. please stay tuned for the next sessi session. okay. so that is the end of a fascinating debate as maria was moderating. let's just recap some of the main highlights. as far as greek psi is concerned olli rehn expects a deal eminently. that had an impact on the bund market. bunds extend their losses. another crucial three days for the eurozone as we look ahead to the eu submit. there will be no greek default in euro bonds, still not the

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welcome back. you are watching "worldwide exchange." time now for your global market report. here in the u.s. ahead of a new read on g itggdp, futures are higher. the s&p looking to open up about 3 1/4 points. the dow about 25 points above fair value. the dow yesterday just skipping hitting a new three and a half year high at least at the close. kar karen, it seems as though that european finance minister discussion with our maria bartiromo has helped the situation in europe in terms of markets now. >> indeed. spot on, bertha. we've seen a brighter picture across the charts and the market did open up weaker here but during that high level talk in davos markets trying to push into the green as some of the key takeaways of the greek psi talks may be concluded today if not the weekend and these talks have been dragging out, weighing on the market early on but some optimism coming back.

talk about that fiscal pact being finalized on monday. it's going to utilities. some of the banks in france we had jpmorgan download. take a look at what we're seeing on the poot si here in london. it has been flirting with the green earlier on. as you can see back in the red now down about a tenth of a percent. the cac has been trying to push into the green as well. just off about three points or about a tenth of a percent. as i mentioned before in the banking second are tore. elsewhere a look at what we're seeing out of germany today, one of the vonger markets still hold ing on to some of that green, now up nearly 20 points or about 0.3%. of that risk appetite coming out of davos during that debate has been seen on the crosses getting right up to about the 131.50

handle but currently around 1.3449. so we are seeing some improvement there. bond markets which have been tracking stronger across-the-board on the safe haven trade after what the fed did promising lower rates, 1.88%. i want to know in particular what we're seeing on the italian market. capping off what's been a really strong week during the debate we heard france's finance minister saying the ecb's ltro has cut tensions in the banking sector, reflecting what we're seeing in italy today. the six-month borrowing costs fell below 2% in the latest auction today. just a month ago the rate on borrowing was 3.25%. so we have seen some improvement there. what are you watching in asia today? >> well, here in asia traders are cautious because we have the u.s. gdp data and the outcome of the greek talks. all that have is holding markets. we're seeing slight gapes. some of these all with the

exception of the nikkei was down on earnings disappointment. we had nintendo, nec announcing bigger losses and that's pulling this particular market lower. el elsewhere we have hang seng holding on to the key 20,000 level. gains were limited. some profit taking going on in the property players so that's capping gains in this particular market. elsewhere profit taking also the theme of the game over in south kcore yeah, 0.4% with samsung electronics posting record profits. we have this latest wire saying samsung electronics saying the german court has ruled against it in a patent suit with apple over mobile technology. this is the latest verdict in an intensifying global legal battle between the two technology giants so that is the key story there. the new zealand 50 is up marginally 0.4%. the australian market is up. bombay sensex 0.9%. that's it for me. i'll be back monday with the news that's moving asia.

good luck with the markets, guys. christine, thanks very much indeed for that. have a great weekend. i'll be staying here for an extra day to enjoy the fine snow in davos. the sun has come out as well post that cnbc debate. we have an italian auction on six month money. the yield down to 1.969% and that compared with 3.25% in december. the lowest since may 2011. so olli rehn talking about the possibility of getting a greek agreement very quickly, psi agreement, also helping bonds as well. let's recap some of the other things that we heard in that debate. the german finance minister saying there would be no greek default in the way he's looking at it, and he said euro bonds again, there's a big debate

about euro bonds. the problem with euro bonds is you can't have them -- if you lack the fiscal discipline because it would given the wrong incentive and then he talked about how big the firewalls need to be. >> no firewall. you can make any firewall any figure, it it will not work if the real problems will not be solved. >> the frieench finance ministe baroin weighed in on the firewall issue. >> translator: we're not here in a negotiating session of the euro group because the question that you raised about firewall is an essential question in our discussions with wolfgang and other colleagues in the minister of finance. the position that the higher the firewall, the less it will have to be used. i mean, that's the deterrent effect. >> and spain, of course, we heard from the spanish economics minister that they needed to foe

can cuss on growth and employment as much as other measures particularly in spain with over 20% unemployment. he also talked about the action the ecb has been putting in with its long-term financing. >> it is not the final cure to the problems that we have right now in the eurozone. it's a helping hand but not a final cure. >> now olli rehn the commissioner was in the meeting. he said there are three things they'll focus on to try to improve the crisis which is basically focus on a new fiscal compact and economic monetary unit that would be a very different structure from the original one and, of course, the spanish economics minister pointed out one of the reasons it failed is germany and france were originally transgressors of that pact. he talked about a prevention game, improving external imbalances, about support from the uk and the united states in terms of funding for the imf it to help with firewalls and reform of growth and employment

policies. the market reaction to what he had to say about the greek psi negotiations. >> we are just about to close a deal on private sector involvement between the greek government and the private creditor community if not today maybe over the weekend. >> so that wraps some of the comments we've heard in that debate, bertha and i thought it did make me smile when he said we have the heads of state sum is mitt on monday. it's another three crucial days. three crucial days for the eu. i feel like i've been through a lot of crucial days with the eu. >> well, will the summit be a charm after 18 months of this. you have to wonder. thanks, ross. here in the u.s. richmond fed president jeffrey lacker was the only one to vote against the central bank's decision to keep

rates low until 2014 and now he's talking about it. he says they are going to need to raise it before then. in a statement on his website says as the economy continues to recover rates will have to go up to prevent inflationary pressures. he has previously expressed concerns about steps the fed has taken in response to the financial crisis including the last round of bond purchases. last year he voted against the decision to launch new currency swaps with the ecb. a federal judge has ruled bp must shield transocean against many claims from the deep water horizon accident. transocean which owned the well won't have to pay compensatory damages related to oil spills below the surface of the gulf of mexico but still could be liable for fines under the u.s. clean water act. a civil trial to determine how to divide up the blame for this spill which helped drill the well begins february 27th. bp and transocean right now bp trading lower by nearly 2% in london transocean n. switzerland

up by nearly 7%. and starbucks' first quarter profits rose 10% on strong sales in the u.s. and az yachsasia. they are attracting new stores in china. they are launching single serve coffee and other products at grocery stores. starbucks' full-year forecast is slightly below forecast. the can company is acknowledging it continues to struggle with higher commodity costs. starbucks shares yesterday slipped a bit after hours following that report. meantime, ben bernanke is head ing back to class. the fed chairman will teach four classes on the fed's role in the economy at george washington university's business school in march. the classes will also be streamed live on the internet. bernanke has a history on campus and taught grad school in stanford. his term as fed chairman ends in 2014. it's possible he could return to

acade academia. in the meantime, a little moonlig moonlighting. >> indeed, bertha. samsung electronics boasted or posted a $4.7 billion profit. on a quarterly basis samsung's telecom business saw a narrowing profit margin as competition heats up with rival apple. research firm strategy analytics said apple took samsung's position as the world's top smartphone maker in the fourth quarter thanks to the popularity of its iphone 4s but samsung said a big chunk of profits also came from strong semiconductor sales and now has plans to $22 billion in chips and flat screen units. samsung electronics shares in trade finishing higher on the order of 1%. japan's core cpi slipped in the year december to 0.1%, a sign the third largest economy is mired in deflation.

prices are expected to say depressed because of sluggish wages at home. japan blames this on the stronger yen and europe's continued debt crisis. december's retail sales out today also provided little comfort. elsewhere, profit creditors will continue talks with the greek government today in a bond swap plan. the institute of international finance, the banking group leading the negotiations said last night in a statement that some progress has been made and the talks focused on the legal and technical issues of the voluntary haircut. and will bank of scotland has cut its ceo's bonus. majority owned by the british state after a bailout in 2008 is performance award it have 3.6 million shares that's worth about $1.5 million. that's half what he received in the previous year and follows political pressure to 0 curb executive pay at the bank.

obviously we're still measuring reaction to that cnbc debate with the finance ministers and olli rehn as well. also, of course, over the last three days and again today, a lot of other people, ceos, policymakers, weighing in with their own thoughts on where we stand in that particular sector and of course with the eurozone financial crisis. amongst them, of course, today and over the last couple of days we've spoken to key financial players. we heard the spanish economics minister say that ecb liquidity support is very important but it's not the final answer. let's get a view of some of the bankers that we spoke to. >> this is impossible, well, hopefully not, but is it challenging? absolutely. we have to be patient. it needs to help with the countries. we have seen in the first few weeks of this year. i think altogether we are strong

enough in europe to manage this problem but we need a different approach. >> the long-term refinancing operations decided by mario draghi was a real catalyst. three years' liquidity for banks in a couple measure. i think, also, the important thing is we need to keep moving, keep moving forward. >> what is good, also, at the beginning of this year is to see is that the bond issuance of the different countries are doing really well, again expectations. i think we are -- it's maybe a crucial point. we are not very far maybe from a circle where effectively all n countries are implementing measures to reduce the deficit where the economic environment is not as bad as some people expected. >> that's a view of some of the bankers here.

also rather mixed views from those who work on the policymaking and economic side of things. >> what you really need is the capacity of governments, business and political parties, governments and opposition simply coming together. a crisis like this one cannot be solved from the perspective of my interests. >> the sense that we are near the edge of a precipice has been walked back considerably. but i think the question is whether that will become a ground for complacency, relaxation and a reversion to old habits or whether the time provided by the ltro will be used to put in place the fundamental adjustments. >> european policymakers and politician have is been slow, neither comprehensive or fast enough for the markets and the challenge, and this was highlighted in chancellor

merkel, they're talking regionally but acting nationally. they're saying the right thing but then they don't actually do it because they're playing to their domestic audiences. i don't think greece can survive the euro and the markets are worried about what's going to happen next. >> gerald lyons who was with us earlier on this program. but besides the likes of germany, we've spoken to other companies and they've had their own thoughts on where the economy is going but within the eurozone and the opportunities outside it. >> the austerity measures have an impact as much as it will lead 0 to lower economic growth and that is our forecast. it's probably as well the consensus in europe that economies will grow substantially lower and maybe drift into recession and with that will be lower demand for products. >> the whole atmosphere for me is too pessimistic.

i think we are all looking at a year which is going to be uncertain and difficult, but i think that's where we perform very well. i think we should kind of roll up our sleeves and get going. >> we did see obviously a slight slowdown in china in the tail end of last year. gdp of about 8.9%. we expect a slower demand in the first half of this year, but into the second half picking up again. but longer term, the fund a fundamentals are there driving with development the emerging countries and the economic transformational change. >> angela merkel wrapping up that sequence. it's been interesting, bertha, if you are a company that's most of the business is in the eurozone, it's pretty tough. if you're in the financial certifica services sector, you're in a very tough period. but outside of that, all of those can companies that are

doing a lot of business globally, particularly in emerging markets, they're feeling pretty good about the world. they have large profits. they have large cash balances. they're walking around optimistic than the rest. it's a point worth making as well. it's not just emerging markets as one engine of growth. of course the united states whether the u.s. can regain some momentum with that gdp. >> but, you know, to larry summers' point, i think the ltro has bought us some time and some breathing room but not necessarily a whole lot of time, right? you've got that greek debt payment. these are critical thee days for them to come up with an agreement on the psi and that payment is due in march so right now we have breathing room, but there are some deadlines coming up that are likely to make people nervous, don't you think? >> as far as -- as far as greece

goes, everybody here i've spoken to, the assumption is greece is going to get the money. however it happens, greece is going to get the money in march and there ain't going to be any kind of default. so i think that's basically the way everybody thinks, karen. >> the ltro because that seems to be coming into the conversation a lot with ceos and a lot with analysts that this really has created some confidence and even more we were watching that davos debate. we saw the latest auction out of italy and this did show the yields have fallen significantly. a good thing for markets. if we take a look at some of the market reaction as well during that debate you can see we had the ftse down beforehand and both -- the cac was down 0.3%. the ftse is still weaker but it has trimmed some of its losses. the cac in positive territory and the dax extending up 0.4% where we did see also strong movement was in yeuro/dollar rates. euro dollar was a little bit

trapped losing its momentum after the early gains on the back of the fed this week but it did get a bid in davos 131.50 potch the key handle now. a look at what we saw on bunds, a strong market out there for what we're seeing on these key rates. in fact, we don't have time for that but there has been some strength in what we're seeing on bond markets. >> and we are seeing strength in the futures pointing to a higher start right now. modestly higher but of course we do have that reading, final reading of fourth quarter gdp at 8:30 and that's likely to set the tone this morning. that's it for us now. thanks for joining us. ross, great work from davos. >> thanks very much. on behalf of everybody here on the team, "worldwide exchange" is finished from the economic for up's annual meeting. right now andrew is here with squa"squawk box." and then treats day after day... who gets heartburn well that's like checking on your burgers after they're burnt!

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the total debt of grease is $400 billion. >> and the impact on u.s. banks if it happens? >> almost zero. >> you believe that? >> the impact is almost zero. >> nobody seems to understand that last month half a trillion euros went into saving the euro. >> it's the best quarter since 1947. >> we're going to take our outlook up again next year 17% and our profit number up 25%.

good morning. the state of the u.s. economy, we'll get a snapshot of growth today. fourth quarter gdp due at 8:30 eastern. euro stress, a key european officials says leaders are close to a deal on a greek debt swap. and your money, your vote. newt gingrich regaining a national lead over mitt romney in the latest nbc news poll. it's friday, january 27th, 2012. "squawk box" begins right now. ♪ this life ain't good enough i'll give my world to live ♪ ♪ my life to better suit your mood ♪ good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin reporting live from davos once again. got a lot going on today. we're ready to go on this friday. andrew, what